NUSA DUA, Indonesia — A new study by the International Monetary Fund projects emerging economies will muddle through recent market turbulence without a severe shock to their financial systems, but flags an outside chance of a crisis.
A few countries, such as Argentina, are expected to suffer contractions. But most will continue to experience growth, despite sometimes drastic declines in their currencies, the IMF said in its Financial Stability Report, released at its annual meetings in Indonesia. In a “severely adverse” scenario, the IMF says capital could flood out of countries at a pace not seen since the 2008 global financial crisis.
The IMF’s managing director, Christine Lagarde, warned in a speech last week that the pressure on emerging markets “could lead to market corrections, sharp exchange-rate movements and further weakening of capital flows.”
Emerging-market stability took on renewed focus this week when Pakistan became the latest country to seek a bailout from the IMF, hoping that the funds will give it enough to shore up its governments’ finances.
An expanded version of this report appears on WSJ.com.
Also popular on WSJ.com:
Nikki Haley to resign as U.S. ambassador to the United Nations.
Thousands of Southerners planted trees for retirement. It didn’t work.
Want news about Asia delivered to your inbox? Subscribe to MarketWatch's free Asia Daily newsletter. Sign up here.
